My colleague Jennifer Siegel wrote about the Fast Food Forward, or Fight for $15, campaign a few months ago. The campaign calls for fast food restaurants to raise their employees’ wages to $15 an hour. At the time, Jennifer noted some of the victories the movement had achieved in the form of state legislation raising minimum wages.
This week, the movement won another victory as McDonald’s announced that it is raising its wages and benefits for 90,000 employees who work in the 1,500 stores that are operated by the company. (The move does not affect the majority of McDonalds restaurants that are owned by franchisees). The company stated that it would increase wages so that they are at least a dollar higher than the minimum wage, with an average wage of $9.90
While the move is a step in the right direction, it is not nearly enough for workers who struggle with higher costs of living. A New York Times article last year described the lifestyle of a Burger King employee earning $9 an hour:
“It’s very inadequate,” said Mr. Moore, 26, who supervises 10 workers. His rent is $600 a month, and he often falls behind on his lighting and water bills. A single father, he receives $164 a month in food stamps for his daughters, 5 and 2.
“Sometimes I ask, ‘Do I buy food or do I buy them clothes?’ ” Mr. Moore said. “If I made $20 an hour, I could actually live, instead of dreaming about living.”
Mr. Moore’s daughters receive health care through Medicaid, while he is uninsured because he cannot afford Burger King’s coverage, he said.
“I skip the doctor,” he said, adding that he sometimes goes to work sick because “I can’t miss the money.”
This is especially glaring in the face of companies’ higher profits. As this Harvard Business Review report explains, from World War II to the 1970s, corporate America used to reinvest its profits, including providing higher salaries for its employees. However, in the last few decades, companies have opted to extract these profits by distributing them to shareholders or buying back stocks, so that their employees’ increased productivity no longer results in higher wages for the employees.
This path was chosen even though providing better jobs actually benefits companies. As McDonald’s CEO said of their recent move:
“We know that a motivated workforce leads to better customer service, so we believe this initial step not only benefits our employees, it will improve McDonald’s restaurant experience,” Steven J. Easterbrook, who has been chief executive for one month, said in a statement.
So why are companies so stingy about wages? The corporate executives who make these decisions receive their pay largely in the form of company stock, and buying back the stock increases its price (and their compensation). Therefore, we cannot rely on corporate executives to do the right thing for their employees or even for their companies. That’s why a movement like Fight for $15 that puts pressure on our legislators and on companies themselves is so important.